Professional Documents
Culture Documents
Stratgic Management: Topic-Porter'S Five Forces of Model On Education Sector
Stratgic Management: Topic-Porter'S Five Forces of Model On Education Sector
Stratgic Management
ON
TOPIC- PORTERS FIVE FORCES OF MODEL ON EDUCATION SECTOR
SUBMITTED TO:SUBMITTED BY:Ms.Jaspreet Kaur GAURAV GUPTA CLASS :-M.B.A 4th Roll No- B-35
SECTIO N: - 1802
Acknowledgement
First of all I would like to take this opportunity to thank the Lovely University for having (Strategic Management) as a part of the M.B.A 4th Sem . Many people have influenced the shape and content of this term paper, and many supported me through it. I express my sincere gratitude to
Last but not the least I would like to thank the Almighty for always helping me.
Gaurav Gupta
TABLE OF CONTENT i) Topic ii) Introduction iii) Education in Post-Independence India: Some Milestones iv) Challenges in Education Sector v)Objectives of education vi) Mission/Vision of Education industry vii) Swot analysis of education industry viii) Porters five forces model ix) Overall Higher Education Industry Assessment x)Current Impressions of the Higher Education Industry xi) Attractiveness of Indian Education Industry xii) Education Industry to be a beneficiary of the new served from India xiii) Biblograply
Introduction:
The Education sector in India
One area that will hopefully receive immediate attention from a government that has been rescued from opposition within its ranks is Education. The Right to Education bill that was drafted in 2005 has not been passed and all discussion on the role of the private sector in Education had been scuttled. Therefore it was heartening to note that immediately after the vote of confidence; the HRD ministry started talking of going to Parliament to initiate some critical reforms in the education sector. The other area that is important is the deregulation of the University sector and allowing foreign and private participation in colleges and universities. The HRD Ministry has again started talking about deregulating and relicensing higher education in line with the recommendations made by the Knowledge Commission. There is little time this Parliament has and therefore it would be great if it could initiate these reforms quickly. Education in India has suffered from severe problems. It has always been seen as an elitist sector and the poor were always left out. Even now, there are thousands of village without access to schools. Even if there are schools, they are meant to provide students to Universities, where the elite go to. Technical and vocational education was ignored as that was not an area where the elite sector would go to. Also, education was considered an area where the government would have complete ownership and control. While commercialization was considered desirable in other sectors, it was not simply seen as an option in education, and in similar ways in the health sector. Both these sectors suffer as they only provide access to the rich and the urban India. But in this column we shall not discuss the health sector. As a result what happened was that very few schools and colleges were opened and because the sector was completely run by the government, the people it could recruit as faculty were usually of poor quality. The better faculty were few and far between and more as exceptions. Even now the problem is acute as is reflected in the more than 40
per cent vacancies that exist in our premier colleges like the Indian Institutes of Technology and the Engineering colleges.
(1963) Third IIM established at Banglore (1975) Integrated Child Development Services (ICDS) Scheme launched to provide for holistic development of children up to the age of six years (1976) Education from being a State subject to a Concurrent (1984) Fourth IIM established at Lucknow (1985) Indira Gandhi National Open University (IGNOU) established by an Act of Parliament (1986) New National Policy on Education (NPE) adopted
(1987.88) All India Council of Technical Education (AICTE) vested with statutory status by
an Act of Parliament (1992) NPE, 1986, revised, based on a review by the Acharya Ramamurti Committee
(1993) National Council of Teacher Education (NCTE) vested with statutory status by an Act of Parliament (1994) District Primary Education Programme (DPEP) launched to universalize primary education in selected districts
National Assessment and Accreditation Council (NAAC) established by UGC (with headquarters at Bangalore ) to assess and accredit institutions of higher education National Board of Accreditation (NAB) established by AICTE to periodically evaluate technical institutions and programmes Sixth IIT established at Guwahati
(1995) Centrally-assisted Mid-Day Meal scheme launched in government and semi-government primary schools all over the country, with central assistance by way of free food grains
(1996) Fifth IIM established at Kozhikode 1998 Sixth IIM established at Indore (2001)Sarva Shiksha Abhiyan (SSA) launched to universalize elementary education of good quality all over the country
(2002) Constitution amended to make Free and Compulsory Education, a Fundamental Right (yet to be brought into force) (2003) 17 Regional Colleges of Engineering converted into National Institutes of Technology, fully funded by the Central Government (2004) Education Cess levied for raising additional finance needed to fulfill Governments commitment to universalize quality basic education (2005) National Commission for Minority Educational Institutions established by Act of Parliament (2006) Two Indian Institutes of Science Education & Research (IISERs) established at Kolkata and Pune, respectively (2007) The National Institutes of Technology (NITs) brought under a common statutory framework by establishing NIT Act. India's education sector in (2009) New Delhi: With the advent of a new year, a look back to the previous year - 2009 is imperative taking into consideration the important developments being undertaken in the education sector of India. Among those to hit the headlines the most in 2009, were the Central Board of Secondary Education (CBSE) Class 10 Board examinations becoming optional; the appointment of India's new HRD Minister Kapil Sibal (who took over from Arjun Singh) and the Common Admission Test (CAT) getting marred by technical glitches.
Challenge of maintaining quality of education in primary and secondary schools, vocational studies, distance education New emerging professions (like BPOs, clinical research, aviation, travel, tourism etc.) Rough estimate of approx 8.8 lakhs elementary schools 3-4 lakhs upper primary schools 1.46 lakhs secondary and senior secondary schools Around 7.7 lakhs ISO 9000 certified schools and 1.1 lakhs ISO 14000 certified schools all over the world ???? Hubs of excellence but no synergy Need for Improvement in Quality in Schools Foundation for all further learning
National Policy on Education - emphasizes the importance of giving special attention to quality aspects of primary education: Improved quality of school provision Focus on learning outcomes Teacher Capacity Building
Presidents address to QCI during the 2nd National Quality Conclave to formulate a quality accreditation system standard for schools and also develop a rating system for verifying the level of adherence. QCI developed a standard of educational quality management system with inputs from educationists, administrators, quality experts and interested parties including parents.
OBJECTIVES OF EDUCATION
Individual Development Developing physical and mental faculties Acquiring the capacities of understanding, appreciation and expression through word and act, are the fundamental aims of education Aim of education should be to make children self- confident and self dependent, and to make them strong physically and mentally Education is meant to develop every child's character, personality and culture and as much knowledge as the child can assimilate not merely memorize.
Social and National Development Social, aim of education in equally important because an individual lives in society and has his obligations towards his nation. There is a realization that, "The present education system does riot yield required results mainly because it is divorced from the real social content and social goals".
Social Transformation Education should not merely equip an individual to adjust with society to its customs and conventions, but it should enable him to bring desirable changes in the society. It has been, therefore, suggested that, "Every educational institution from secondary school to university college should be developed to become an agency of change...." However, it is essential that we should be quite clear about the purpose of change.
Value Education
Education is a methodical effort towards learning basic facts about humanity. And the core idea behind value education is to cultivate essential values in the students so that the civilization that teaches us to manage complexities can be sustained and further developed. It begins at home and it is continued in schools. Everyone accepts certain things in his/her life through various mediums like society or government. Value education is important to help everyone in improving the value system that he/she holds and put them to use. Everyone has understood their values in life they can examine and control the various choices they make in their life. One has to frequently uphold the various types of values in his life such as cultural values, universal values, personal values and social values. Thus, value education is always essential to shape one's life and to give him an opportunity of performing himself on the global stage. The need for value education among the parents, children, teachers etc, is constantly increasing as we continue to witness increasing violent activities, behavioral disorder, lack of unity in the society etc. The family system in India has a long tradition of imparting value education. But with the progress of modernity and fast changing role of the parents it has not been very easy for the parents to impart relevant values in their wards. Therefore many institutes today conduct various value education programs that are addressed to rising problems of the modern society. These programs concentrate on the development of the children, young adults etc. focusing on areas like happiness, humility, cooperation, honesty, simplicity, love, unity, peace etc.
Vision
To be a provider of globally-competitive Proficient Professionals. To nurture and sustain academic excellence, programmed to promote innovation, scholarship and abilities to analyze, experiment and synthesize. To foster academic-industry/professional synergies and to forge strategic alliances for greater upward mobility. Impart need-based education and create an ethos for research of relevance. Contribute to social & industrial development of the region.
Weaknesses:
1. 2. 3. 4. 5. Over 50% of the managers and supervisors are eligible for retirement The agency does not offer a mentoring program The agency lacks the technology tools to be more efficient Procedural manuals need to be updated The current workforce is not very racial/ethnic diverse
Opportunities (external)
1. New information technology tools can provide quicker data sharing between agencies and client information retrieval 2. There are job sharing opportunities with other agencies
3. A large number of retired baby boomers are considering returning to the workforce on a part-time basis 4. 5. Federal and state agencies have expressed interest in merging services Universities are looking for internship opportunities for their students
Threats (external)
1. 2. 3. 4. 5. The demand for workers in the field exceeds the supply of potential workers There is less federal money available for training grants Budget and full-time positions have been limited by the legislature Educational institutions are reducing the number of courses offered in this field The number of residential treatment centres has been declining steadily
interesting observation that is somewhat masked, is a trend of declining enrolment in full time residential undergraduate and graduate programs (Breneman, D., et. al., 2006). These trends, on the surface, might sound contradictory to the casual observer. How can residential or traditional student enrollment be decreasing while total demand for higher education has outpaced supply? The for-profit sector has recognized these market changes and developed business strategies to take advantage of them, by offering numerous programs targeted at profitable niche markets. This increases supply, but concurrently, small private liberal arts colleges are closing their doors at an alarming rate, decreasing supply and leaving the public universities to act as a supplier of last resort (Van der Werf, M., 1999). One could argue that non-profit universities are keenly aware of these trends and have formally incorporated them into their long range planning, but are not changing their current business models and marketing strategies. Why you may ask? They do not have to, because they are producing at capacity. Laureate Education, Inc. (www.laureateinc.com), a leading for-profit provider of higher education, predicts all industry members stand to gain over the long run because demand for higher education will continue to increase. Laureate bases their prediction on a growing youth population, a growing middle class that understands that education is the key to social mobility, and global industrys demand for a technically educated work force. Following that same line of thought, Richard S. Ruch, says in his book, Higher Ed, Inc., the combination of public and corporate dissatisfaction with traditional education, favorable demographic trends, and the infusion of a new kind of endowment private investment capital into the for-profit segment suggests that the for-profits will probably continue to take an increasing share of the education market (Ruch, 2001).
education firms have noticed weaker earnings, sporadic enrolment drops, and falling stock prices, all of which signal extreme caution to any potential new entrant (Value Line, 2008). An additional barrier to entry, although tangential, is the existence of intellectual property and technology transfer offices within most university systems. These offices protect and monetize university research, which represents addition cash flow, and benefit from existing economies of scale and departmental synergies. Probably one of the most controversial barriers to entry into specific areas of higher education is the requirements and restrictions imposed by accrediting associations. These organizations, while promoting curriculum standards, affinity group branding and visible education outcome metrics, also cleverly protect the incumbent members with an accredited by license. The success and reputations of business schools, medical colleges and law schools are critically interwoven with certification and accreditation (see www.aacsb.edu for example). Surprisingly, incumbent universities control most accreditation boards. An example of the control that an industry managed accreditation board has is where the Association to Advance Collegiate Schools of Business, the most influential business school accreditation board, will not accredit the business school of the University of Phoenix.
With roughly 17.5 million currently enrolled students in higher education institutions in the India, without any specific target groups representing a majority market share, buyers are fragmented and diffused across the market. This buyer characteristic limits the effective power any one specific student may have in terms of negotiating tuition rates, admission requirements and other amenities. There is one acceptation to this observation. Public and private universities are targeting and aggressively recruiting the standout 15-25 percent of high school classes with the predictable, but unintended consequence of giving this market segment generous power to choose their options and to negotiate. In todays information age, the contents of an undergraduate record of course descriptions is only a mouse click away. School search and evaluation data is a frictionless, symmetrical and essentially free process. Of course, this not was always the case. Twenty years ago, a high school student had to patiently wait weeks to receive an university record by mail to assist with college evaluations. It is axiomatic that the more information a buyer has, the more balanced the transaction or exchange will be. Two additional components that influence the degree of buyer power are the rate of growth for the specific industry and the strategic value of the buyer to the industry as a whole. A growing market diminishes buyer power relative to a market with an average growth rate and along that same argument, the more distributed buyers are over a given geographic location, the less power they accrue (Walker, 2004).
because the existence of the product or service augments the features and benefits of an incumbents product offering. An additional economic process that measures the threat of substitution is the availability of priceperforming product alternatives. As an example, most state supported universities within a specific state have similar tuition rates and largely, the state tuition structure is equivalent for potential students. Thus, it essentially costs the same to attend Management Institute and State University as to attend the University of Delhi. Potential students or even transfer students could view these two universities as proxies (Heaven forbid!). Switching costs between products and services are a concrete aspect of the abstract concept of product substitution. As an example, the process of transferring between universities or colleges is relatively fluid within the India. More specifically, moving between one business school and another is an example where the tangible and intangible switching costs are low because of the availability of compatible curriculums. Obviously, one could get caught in the details of transfer credits, course descriptions, and degree requirements, but as compared to the cumbersome tasks of transferring to a new school in the India (the positive benefits of the Bologna Process aside), India students probably only have a slight emotional cost involved. Not to over generalizing but, younger adults are more disposed to change than older adults. Youth brings out the attitude of what do I have to lose as contrasted to the anchors of age associated with older adults. It is not a stretch to conclude that younger adults have a higher propensity to substitute than older adults do, within the same population of higher education students. Of course, these examples are hypothetical and best measured by transfer rates and graduation rates. Price points widely differ between the public, private and for-profit higher education segments. For-profit universities deliberately price their degree programs between the public and private tuition schedules. In economic terms, the for-profit sector overall, prices at the price elastic point of the higher education demand curve. However, this strategy does have some weaknesses, including the unintended consequence of effectively minimizing switching cost between a public university and a for-profit institution. In addition, since for-profit tuitions are high relative to public universities, the student is already price conditioned which makes transferring to a more expensive private school a realistic option. The overall assessment of the threat to substitute is high and not beneficial to the industry incumbent.
power, based on low concentration and fragmentation, is also beneficial to industry incumbents. The threat of substitution is high with numerous forms of higher education and from the incumbents perspective; it probably represents the most adversarial force to incumbents. Buyer power is neutral, which on the surface appears to be relatively benign, but buyer power is growing at a much higher rate as compared to the remaining competitive forces and over the long term will probably become the most threatening economic force for incumbents to monitor. From the preceding industry analysis, based on the Porters Five Force framework, the overall assessment of the higher education industry for both the incumbents and potential entrants is neutral. While the overall higher education industry analysis may seem ambiguous and not of standout significance, by being in the middle of the competitive road, most industry strategist would argue that industries with a neutral competitive assessment represent some of the greatest challenges to managers. There are no clear road signs to follow while navigating the ever changing direction to sustainability and profits.
take advantage of them, by offering numerous programs targeted at profitable niche markets. This increases supply, but concurrently, small private liberal arts colleges are closing their doors at an alarming rate, decreasing supply and leaving the public universities to act as a supplier of last resort (Van der Werf, M., 1999). One could argue that non-profit universities are keenly aware of these trends and have formally incorporated them into their long range planning, but are not changing their current business models and marketing strategies. Why you may ask? They do not have to, because they are producing at capacity. Laureate Education, Inc. (www.laureateinc.com), a leading for-profit provider of higher education, predicts all industry members stand to gain over the long run because demand for higher education will continue to increase. Laureate bases their prediction on a growing youth population, a growing middle class that understands that education is the key to social mobility, and global industrys demand for a technically educated work force. Following that same line of thought, Richard S. Ruch, says in his book, Higher Ed, Inc., the combination of public and corporate dissatisfaction with traditional education, favorable demographic trends, and the infusion of a new kind of endowment private investment capital into the for-profit segment suggests that the for-profits will probably continue to take an increasing share of the education market.
Speaking on the topic, Ritesh Hemrajani, Consultant, IMS, said if one looks at the last five years there are about 1,500 management colleges, close to about 3,500 engineering colleges and about 1,200 medical colleges. In terms of private schools mushrooming day in and day out and a majority of the new institutions being private, if one wants to put a number to it, the privatelymanaged part of it would not be anything less than 20 to 25 thousand crores. In recent months, the education segment has also seen the rising interest of private equity players. India-focused PE firm Gaja Capital Partners invested 8.25 million dollars in Career Launcher. Similarly, SAIF Partners invested 10 million dollars in the English training academy Veta and ICA Infotech. Some of the other listed companies in the education segment are Educomp Solutions, which posted a return of 374 per cent. Everonn Systems, which got listed in August 2007, gave a return of 130 per cent in just five months. Not far behind are the older horses such as Aptech and NIIT, which fetched returns of 162 per cent and 124 per cent last year. He also added, In the next five years, I dont see any reason why we shouldnt be looking at a thousand crore market. It is believed that based on the current and future manpower requirements of the various sectors, there is a huge demand-supply gap in the education space. This has attracted many players to invest in education and training institutions with the aim of building valuable franchises that can be rapidly scaled up.
publicity campaigns, all service providers who have a total foreign exchange earning of at least Rs 10 lakh in the preceding or current financial year shall be eligible to qualify for a duty credit entitlement of 10% of total foreign exchange earned by them. The duty credit entitlement may be used for import of any capital goods including spares, office equipment, professional equipment, office furniture and consumables, related to the main line of business of the applicant. Only those educational institutions involved in exporting education are likely to benefit under this scheme. Will this scheme help incentivise more educational institutions to get involved in exporting education? The amount of foreign exchange earnings per year required to qualify for the duty credit entitlements is quite low at just Rs. 10 Lakhs or US$23,000. The average annual tuition fee for foreign students in India is about US$ 4,000. Presumably any institution with 6 or more foreign students will be able to qualify under this scheme.
References
www.quickmba.com/strategy/porter.shtml www.marketingteacher.com/Lessons/lesson_fivefoces.htm www.pdfqueen.com/pdf/po/porters-5-forces-for-education-industry www.12manage.com/methods_porter_five_forces.html www.allfreeessays.com/topics/porter-5-forces...industry/60
Journals
Shailey Minocha1 (2005) Role of social software tools in education: a literature Yvonne Boora2 (2006) strategic planning in higher education: a review of the literature
Simon Saukville, Tom Browne3 (2007) Accommodating the newfound strategic importance of educational technologists within higher education Jane Hensley-Brown, Iskar Palatka4 (2008) Universities in a competitive global marketplace: A systematic review of the literature on higher education marketing
BOOK
Strategic management a) John A Pearce b) Richard B Robinson